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Over 100 Gazipur RMG factories hit hard

Arifur Rahaman Tuhin
14 Oct 2022 00:00:00 | Update: 14 Oct 2022 04:46:50
Over 100 Gazipur RMG factories hit hard
The factories that are already grappling with the falling work orders are facing 14 to 15 hours of power cuts in a day – Courtesy Photo

The erratic power supply has severely been hampering the production of hundreds of apparel factories in Gazipur since last week.

The factories that are already grappling with the falling work orders are facing 14 to 15 hours power cuts in a day, missing shipping deadlines, and increasing production costs, according to the RMG makers.

“More than 100 factory owners in the Gazipur area lodged complaints to BGMEA about the erratic power supply,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Shahidullah Azim told The Business Post.

For example, Rupa Group has been facing an average 14 hours load-shedding in a day. The group has a gas-fired captive power plant, but it failed to perform properly due to the gas crisis.

Amidst the dire energy crisis, the company has been forced to produce power by using costly diesel-fired generator to continue production, and it needs over 100 liter diesel per hour to feed the generator, according to Rupa Group Managing Director Md Shahidul Islam.

“The production cost increases by around 7 per cent and I’m going to be a big loser,” he said.

In the same breath, Fashion Flash Ltd Managing Director Helal Uddin Ahmed said that he had to spend Tk 4,000-5,000 per day to run a diesel-fired generator, but now he has to spend Tk 40,000-45,000 due to frequent power cuts.

In addition, he is spending Tk 30,000 per day to buy CNG due to low pressure gas distribution pipelines for the factories.

“The government fixed a zone-wise load-shedding schedule but it is not working now, forcing us to run generators during the full working hours. It is difficult for us to continue business by spending Tk 75,000 in additional cost per day,” Ahmed.

When Russia invaded Ukraine back in February, the war disrupted global gas and crude oil supply. It pushed the prices up, and triggered a global economic crisis. The ripple effect hit Bangladesh, causing the country’s forex reserves to decline from $48 billion to $36 billion.

To tackle this crisis, the government reduced LNG imports and decided to ration electricity supply from July 19.

Currently, many gas-fired power plants have halted production, while diesel-fired plants are producing power under a rationing system.

However, for a RMG or textile factory, running production with diesel generators does not come cheap. The additional costs triggered by the energy crisis are piling up, putting serious pressure on the country’s export-oriented industries, and the overall economy.

Industry insiders pointed out that the energy crisis has hit them at a time when they are already dealing with dwindling export orders, negative export earnings growth, and a steady decline in the country’s forex reserves.

For the sake of keeping Bangladesh’s export sector and overall economy in good health, RMG industry leaders urged the government to provide uninterrupted gas and electricity supply to the factories.

The ongoing crisis is one of the key reasons behind Bangladesh’s $3.9 billion earnings from exports in September, recording a 6.25 per cent negative growth compared to $4.16 billion posted in the same period last year, show data from the Export Promotion Bureau (EPB).

BGMEA President Faruque Hassan said, “We’re passing bad time due to the frequent power outages. The production cost is rising and buyers are threatening to revoke orders. But we’ve nothing to do as frequent power cuts, gas crisis and higher diesel price made us overwhelmed.”

“The production delays caused by relentless load shedding are forcing us to use air freight for quick product shipment, which is very expensive,” he said.

“Power and gas are the lifeline of industry. If the government fails to ensure the energy and the current situation continues, the buyers are likely to relocate their business, which is definitely not good news for the country’s economy.”